Contactless payment transactions are well known in the art and are enabled by short-range wireless technologies such as Near Field Communications (NFC). NFC is a set of standards for communication protocols which enable NFC compliant devices to exchange data in very close proximity. NFC is based on Radio Frequency Identification (RFID) standards including ISO/IEC 14443, ISO/IEC 18092 and Felicity Card (FeliCa). NFC standards are governed by the NFC Forum founded by Nokia, Philips and Sony in 2004 and the Forum now has over 160 members worldwide. The NFC Forum is commissioned to promote the NFC standards and certify devices for NFC compliance worldwide.
NFC allows two-way communication between NFC devices. In addition, an unpowered NFC chip (“tag”) can also be read by NFC devices, thereby enabling one-way communication as well.
NFC devices are usually used in contactless payment systems. For example, Google Wallet is a payment service and an Android app by Google to allow users to store credit card, debit card and store loyalty data on a virtual wallet—e.g., as an app downloadable to an NFC-enabled Android Smartphone—so that the user can simply tap the Android Smartphone at an NFC-enabled payment terminal to complete a sales transaction. The user can also bring his NFC-enabled Smartphone to very close proximity of an NFC-enabled payment terminal to complete the payment as well.
NFC technology is ideal for contactless payment due to its security features (matching encrypted security code and transporting access key) and extremely short transmission range (approximately 4 cm to 20 cm maximum).
At the point of sale, NFC-enabled payment terminals in the market include “PayPass” from MasterCard. MasterCard PayPass is a Europay, MasterCard and Visa (EMV) compatible, “contactless” payment feature based on the ISO/IEC 14443 standard that provides users with a simpler way to pay by tapping an NFC-enabled payment device such as an NFC-enabled Smartphone, on a point-of-sale payment terminal reader rather than swiping or inserting a card. There are an estimated 300,000 PayPass payment terminals deployed.
In September 2007, Visa introduced Visa PayWave, also a contactless payment technology feature that allows cardholders to wave their card in front of contactless payment terminals without the need to physically swipe or insert the card into a point-of-sale device. This is similar to the MasterCard PayPass service, with both using NFC or RFID technology.
In addition to Google Wallet, Verizon also offers, in partnership with AT&T and T-Mobile, a similar service called ISIS.
Known contactless payment systems require the availability of an NFC-enabled payment terminal at the point of sale. Such payment terminals are generally located at checkout areas in retail stores and are deployed in fixed locations. Users must physically bring an NFC-enabled payment device, such as an NFC-enabled Smartphone, to very close proximity of an NFC payment terminal or physically tap an NFC-enabled Smartphone on an NFC payment terminal in order to complete the transaction.
However, there are many situations where it may not be convenient for the user to bring an NFC-enabled Smartphone to an NFC-enabled payment terminal at a retail store. For example, when a user is driving a car and wishes to make payment from the NFC-enabled Smartphone, the user will be unable to complete such a transaction while inside a vehicle. Such needs may exist when the user, who is inside a motor vehicle, wishes to purchase with his NFC-enabled Smartphone parking, drive-in movies, bridge tolls or even food at a drive-through of a fast food restaurant. This disadvantage discourages wider adoption of the contactless payment technology.